Archives for January, 2013

Rothschild Equity Release Explained

A great anonymous piece that explains how it all happened.

It could have not been written better by Rothschild.

Contracts Used to Evade Taxes Declared Void

Several Spanish Courts are already ahead of the game on using contractual artifices to evade taxes, pretty much what the Equity Release was all about. The chief difference between both setups is that whilst the ones already set aside were mutually agreed on the understanding that it was illegal to do so, on the Equity Release banks lied as to the legality of the matter and misrepresented the truth.

As Nordea put it

We offered you advice which we thought was correct at the time of publication. It was however your prerrogative to go elsewhere to obtain correct advice…(!)

In contrast to Nordea’s clever plan, Madrid-based National Audience said the following about contracts used to avoid Capital Gains Tax:

It is reasonable to presume that the profuse and complex series of contracts carried out by the parties answered to a fiscal strategy and, in reality, had no other purpose than to evade taxes…In summary, the object of each of the contracts agreed to was unconnected from the real economical nature that they are intended for, and were rather used seek tax avoidance, once the contracts were succesfully implemented, on the gains derived from the main agreement.

The Superior Court in Navarra established that:

No juridical contract can enjoy this status if it is intended to attain a tax advantage, because no tax advantage can be transferred between the parties, and thus such contract produces no effect in respect of third parties…what has been confirmed is a surreptitious avoidance of taxes which none of that parties were entited, directly or indirectly, to legally avoid.

And more recently, on the 2nd of February 2012, th Supreme Court in Madrid endorsed all prior judicial opinion on the matter by ratifying that:

We must conclude  by asserting the illicit nature of the object of the contract insofar as the aim pursued by the parties was an illegal and immoral business common to both…exemption and tax advatange…without any of the parties being entitled to it.

If the contracts are not valid, there is no question of them being set aside and damages being awarded…for they never existed.

Courts Voids Mortgage Loan Due to High Complexity

The mortgage loan referred to, tagged as “highly speculative” by the Court, was declared void due to the bank not having advised the parties of the real risks.

The Court concluded that the bank was under the obligation to provide clear, transparent and adequate information in respect to the product, but failed to do so. At the most, according to the ruling, the bank offered “verbal advice”, which was then considered to be “…not consistent with a statutory mandate to provide a precise and clear explanation of the risks associated to the product”.

The ruling insists on the uncontested fact that Caixa Catalunya glossed over certain keys aspects of the risks of currency exchange rates and interest rates, and the impact this could have on the mortgage.

Which takes us to the following questions:

  • How would this Court view Nordea Bank Luxembourg’s “Home Sweet Home” pre-contractual information package?
  • And what about Rothschild’s “conservative approach” or rather, the “mortgage that would not be looked upon as one?”


BFI Consulting, Swiss Life, Nordea Bank Luxembourg and…Allan Graydon!

SwissChoices is about Swiss Quality. And that is how it will be delivered to SwissChoices clients.

At ERVA, we often visualize Allan Graydon sitting at his kitchen table, in his underpants, thinking about how to drive new business in, and, upon coming up with new brilliant ideas, dialling one of the following numbers:

  • Nordea Bank (Luxembourg) S.A. Jhon Mortensen
  • Peter and Jane, caught up in the Landsbanki scam, asking for €500 to negotiate with infamous Yvette Hamilius.
  • BFI Consulting Frank R. Suess
  • Swiss Life Ivo Furrer
  • Mercadona Calahonda home delivery service.
  • Spririt Hairdressing and Beaty Salon, Nueva Andalucia
  • Norman Steele, long-standing pal and former partner, who fell foul of some national authorities for fraud.
  • Morten Remo Sorensen, current partner fined by the Spanish financial regulator (CNMV) for illegally offering financial investment services on behalf of consumers.


Experienced investor funds-buyers beware!

Mark Davis, from Brooks Macdonald Asset Management, warned pensioners back in 2004 of what he thought was an extremely dangerous scenario:

The situation in Spain however when dealing through unregulated advisers is much like the funds themselves; not subject to any form of regulation or approval and investors are not protected by any statutory compensation arrangements in the event of miss-selling.

The 2004 article did not have the benefit of hindsight nor can now be dismissed as the typical “I knew-it-all-along” rubbish: it was happening there and then but almost no one saw it happening! In fact, we can say that it was all just starting…and still he publicly warned of this very uncomfortable yet dangerous scenario.

Good for you Mark but shame not many people read your piece.

Nordea Bank Luxembourg Lawyer’s Principles

The attached picture corresponds to Mr. Jesus Pérez de la Cruz Oña, acting lawyer for Nordea

Bank Luxembourg S.A., nothing wrong with that. In fact, his austere expression conveys seriousness and rectitude, qualities that these days are in short supply.

Mr. Pérez Cruz represents a company, Nordea Bank Luxembourg S.A., that produced what is probably the most comprehensive tax-evasion brochure ever to be published by any company, and perhaps the only bank to have done so, so far with little consequences for them. And he defends its content vigorously, for which he gets paid nicely, as a result of his swear-in ceremony, wherever it took place; again, nothing wrong with that.

Let’s remember what Nordea said:

Borrowers may take up a mortgage loan either at the time of the purchase of a Spanish property or after having owned the property for some time….the latter case is more aggresive from a tax point of view and therefore more uncertain…taking up a mortgage loan at a later stage runs the risk of the Spanish authorities questioning the purpose of the mortgage…as this publication was being prepared, mortgaging Spanish property some time after its original acquisition was a matter of some debate in Spain…according to the information the authors had at their disposal at the time of writing, taking up a mortgage at a later stage was still expected to be accepted by the Spanish authorities in future.

Generally speaking, the risk of receiving unwelcome enquiries from the Spanish taxman should only exist in situations where the owner is a non-resident who takes up a mortgage loan with the aim of trying to minimize his/her net wealth tax liability.

But one thing is not right: Mr. Perez Cruz says in his CV that he practiced for prestigious Uria & Menendez, a company that said about these products – before removing the paragraph following a phone call from Rothschild- the following:

It may not be discarded that the Spanish Authorities may try to challenge the deductibility of a loan granted to a non-resident for IHT purpose under the arguments that either (i) the debt has been “simulated” for the exclusive purpose of reducing the Spanish IHT liability or (ii) because the lack of connection of the debt transaction with Spain, the Spanish elements of the debt have been artificially incorporated to the debt…

Groucho Marx: Those are my principles, and if you don’t like them… well, I have others

Can anyone locate Maria Tremurici-Falter?

ERVA is looking for María Tremurici-Falter, Marbella-based collaborator to the Senegal Consulate,  agent for Sparekassen Lolland A/S and the “first woman to run a financial company”.

Some Equity Customers wish to talk to her about the qualities of their Equity Release products, as advertised on Sur in English some years back (search Maria on this link), since it appears that the bank wants to now foreclose…


Landsbanki liquidator to sue victims group for defamation

Thick-skinned Yvette Hamilius resilience cannot be explained other than by assuming she has been paid a truckload of money, or blackmailed in some sordid manner, to endure the barrage of persistent attacks from hundreds who feel, and quite rightly may we add, totally conned by the company that she represents.

There is no need to transcribe the article that appeared on the Luxembourgeois online newpaper but we will add that, if lawyers acting for Ms. Anne Vershchaffel succeed in having foreclosure proceedings, brought by Jyske Bank, declared null and void due to using an unregulated valuation company from Girbraltar on a Spanish property, the 200 or so “customers” of Mrs. Hamilius will be able to sleep a bit better.

Because the concomitant effect of attaining this ruling is not only that Landsbanki will be barred from bringing foreclosure proceedings in Spain as they too used one of such unregulated businesses but also, that the mortgage loans would be automatically void by application of article 6.3 of the Spanish Civil Code:

Legal agreements that contravene obligatory or prohibitive laws are null and void, unless applicable laws envisage a different legal outcome.


Equity Release Income Illustration

If Inheritance Tax savings was not enough enticement -or more accurately, as Steve Dewsnip tells us, it would save your home from the predatory Spanish Taxman– , the perfomance of the deal was presented as being so good that you would end up having that extra generous income by putting “your bricks to work for you” (Allan Graydon).

The attached is a brutally misleading illustration that, additionally, omits any reference to adverse market movements.

But the banks rationale was different: why would you want to put your customers off buying into the product if it was working for the bank? At the end of the day, if it all went tits up banks would argue that the customers could and should have “gone elsewhere to get accurate advice” (Nordea Bank Ipse dixit).

Rumour has it that for someone somewhere in the mountains of South Cordoba…it did actually work for a few months. The ERVA investigations teams are keen to meet this endangered specie…

(the attached was given to a Rothschild customer).


Petition Filed With Courts to Declare Jyske Bank Valuations Illegal

Lawyers acting for a Jyske customer have filed a petition against Jyske Bank to declare foreclosure proceedings null and void,on grounds that the valuation was carried out by an unlicensed valuation company, Gibsons Chartered Surveyors.

And whilst the company’s legality was not put under question, their ability to legally provide valid valuations for mortgage loan purposes in Spain was and therefore, acting lawyers have requested, initially, that foreclure proceedings are halted and annulled and will, at a second stage, apply for the mortgage loan contract to be set aside. 

Lawyers acting for the bank have contested the petition by claiming rather confusingly that Jyske Bank A/S London Branch is not Jyske Bank A/S Denmark nor Jyske Bank Gibraltar, and that as a result, they do not come under Spanish laws. This has proven to be a lie.

Also, they have not however contested the fact that only companies authorized by the Bank of Spain can provide valid valuations and insist that, as the loan was “granted” in London, Uk laws apply to the loan.

The repercussions of this could be enourmous for Gibson Chartered Surveyors have worked for Barclays Bank Plc, Newcastle Building Society, Norwich and Peterborough Building Society, Credit Suisse (Gibraltar) Ltd, and ABM Amro Bank when giving out, presumably, hundreds of mortgage loans in Spain.

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